LIGA TO LOSE $175M

The Louisiana Insurance Guaranty Association (LIGA) will take a $175 million hit covering claims owed in the state by a failed Pennsylvania insurance company that mainly provided business and workers’ compensation coverage in Louisiana and across the country. According to a report in the Advocate-Baton Rouge, the payout on claims in Louisiana against Philadelphia-based Reliance Insurance Co. is the largest faced by the guaranty fund and eclipses the $125 million failure of Champion Insurance in 1989, LIGA Executive Director Allen Edwards said. Edwards noted that Reliance’s Louisiana losses are manageable through LIGA, whose main source of revenue comes from an assessment on member insurance companies. The association, created by the legislature, has not assessed companies the fee in four years because of stability in the state’s insurance market. However, Edwards said the Reliance failure will make it necessary that LIGA think about reinstating the assessment, adding that LIGA has a $70 million cash reserve for outstanding insolvencies. Pennsylvania regulators shut down and liquidated Reliance after abandoning attempts to reorganize the company. Reliance did business in all 50 states and faces $10 billion in claims, with a deficit of more than $1 billion, and losses of $2 million to $4 million a day. The states with the greatest number of policyholders include California, New York and Texas, according to J. Robert Wooley, Louisiana’s acting insurance commissioner.

Topics Louisiana